Oregon committee hears heated debate over bill to curb insurer audits of behavioral-health providers

The House Committee on Behavioral Health heard more than two hours of testimony Feb. 5 on House Bill 4,028, a measure that would limit how insurers and coordinated care organizations audit behavioral-health providers and add new reporting and transparency requirements.

Representative Rob Noss, chief sponsor, told the committee the bill is meant to ‘‘right-size’’ the audit process for small practitioner providers and make audits more transparent and fair. Noss summarized the bill's three parts: restrictions on commercial insurer audits (sections 1–3), separate rules for coordinated care organizations and Medicaid (sections 4–6), and a new reporting provision (section 7). He said the bill would require audits to be written in plain language, list documents required for claims, and ‘‘identify which requirements may result in recoupment for failure to comply.’’

Supporters, including small-practice clinicians and provider groups, urged passage. JL Wilson of the Oregon Independent Mental Health Professionals summarized sections 1–6 and listed specific protections: a 12-month limit on insurer clawbacks in the commercial market (with longer windows for fraud), a 180-day timeline to complete audits of paid claims, a 30-day timeline for prepayment audits, a prohibition on recoupment for clerical errors, at least 30 days for providers to correct identified errors, a three-year repayment-plan option for recoupment, and a ban on simultaneous audits and statistical extrapolation that can multiply clawbacks.

‘‘These are small businesses whose sole revenue comes from insurance companies,’’ Wilson said, arguing the present system creates a power imbalance. Several clinicians described audit experiences they said threatened their practices, including one practitioner who said a software glitch led to a large recoupment despite documentation showing longer sessions.

Section 7 drew particular attention; proponents framed it as a parity-enforcement tool that would expand the definition of medical-management practices and require insurers to report how they use prior authorization, utilization review, code restrictions and audits. Psychologist Melissa Todd said the reporting language ‘‘builds on [Oregon's] success’’ from earlier parity reporting and will make nonquantitative treatment limitations more comparable across plans.

Insurers and CCOs testified in opposition or with technical concerns. Rick Blackwell of PacificSource warned HB 4,028 ‘‘moves the pendulum too far away from ensuring program integrity and accountability,’’ stressing that plans must detect and deter fraud, waste and abuse. He described existing compliance steps—electronic portals for records, 30-day response windows, education and recoupment as a last resort—and argued that some bill provisions may conflict with federal or contract obligations.

Henry O'Keefe, representing a coalition of CCOs, raised preemption concerns tied to federal rules and pointed to a federal Code of Federal Regulations requirement that, in some Medicaid contexts, supports a six-year look-back period. EOCCO president Anne Ford, who spent decades in auditing and compliance, argued narrowing audit tools could weaken Medicaid program integrity; she said audits are intended to verify medical-necessity documentation and urged improvements to documentation standards as part of any reform.

Committee members pressed both sides on definitions and implementation: what qualifies as a clerical error, when the audit clock should start, how to align state rules with federal requirements, and whether audits are conducted by in-house clinicians or outside contractors. Some members asked staff to follow up on parity of audit frequency between behavioral and medical providers.

Proponents said the bill was drafted to avoid ways-and-means fiscal problems that stalled prior versions and to align with federal parity guidance where feasible. Opponents asked for amendments to account for plan-year implementation, to clarify when an audit's timeline begins, and to avoid conflicting standards across lines of business.

The public hearing on HB 4,028 closed without a committee vote; Chair Pham moved the committee on to work sessions on other bills. The measure remains pending as sponsors and opponents signaled willingness to negotiate technical changes.

What's next: HB 4,028 will be subject to further committee action and possible amendment. Proponents urged expedited consideration to protect small providers; insurers and CCOs requested more time to resolve federal preemption and operational concerns.